Your Research Dollars At Work-A Blue Chip Investment
GroundCover™ Issue: 1
High returns from projects supported by the growers through the GRDC and its predecessor bodies underscore the large benefits from research and development that flow to both grain producers and the Australian community.
The results of a recent survey confirm that investing in grains industry research is a highly profitable activity for growers.
Benefits high according to costs
An independent economic analysis of selected grains research and development projects was commissioned by the GRDC in 1991-92.Benefit-cost analyses from this study suggest that over the life of 16 projects, benefits are expected to exceed costs by $1010m in present value terms, using a 10 per cent discount rate. This is equivalent to an annual average benefit of the order of $100m.
Put another way, the benefit received farmers and the community was $19 ually over the life of the particular technology for every dollar spent on these projects (19:1).
If the GRDC's equity in the research is extrapolated, the 16 projects will return benefits equivalent to the Corporation's annual expenditure.
Returns of this order from the selected group of projects are a good indicator that the GRDC's current annual expenditure of $36m is achieving a highly satisfactory return on investment to Australia's grain growers.
Selection of Projects
The analysis was commissioned by the GRDC to measure the benefits of research in the grains industries, to strengthen accountability to the fund providers, the farmers and the Commonwealth, and to develop a relatively simple benefit-cost methodology which would improve feedback on completed projects and provide an efficient framework for the allocation of resources when projects are selected.
Projects were selected based on their amenability to economic analysis. However they covered a range of grains, a range of research institutions and a range of research fields.
The study concentrated on the more readily quantifiable economic benefits from plant improvement projects. These included benefits through improved yields and lower production costs related to research into farming systems.
Such improved systems can also provide environmental benefits through more sustainable crop rotations.
Marketing research can provide benefits through increased demand for products, price premiums and new markets.
Credit for these benefits goes to the grower-funded GRDC and the commissioned research organisations: the state departments of agriculture, universities, CSIRO and the Bread Research Institute.
The Corporation's approach is market-driven. It forges links between the industry's primary, manufacturing and services sectors. The GRDC acts as a facilitator, negotiator and investor in grains research and development.